Should Canadian Investors Get The Morningstar Premium Membership?

When I was in Omaha with my homeslice JT (I’m so cool), he sang the praises of having a Morningstar premium membership. And by sing the praises what I really mean is he shrugged and said “yeah, it’s worth it I guess.” And then we ate food because that’s literally all there is to do in Omaha.

So somewhat based on his recommendation, I decided to check out Morningstar’s Canadian version of their premium membership. Here’s what it gets ya:

Analyst research on “more than 350 different Canadian…mutual funds, segregated funds, ETFs, and stocks.”

Something called a portfolio x-ray, which analyzes your asset allocation, quality of stocks, and junk like that.

Premium stock screeners

A tool that recommends and disses funds, depending on their quality

Stock alerts

Portfolio management tools

And a bunch of other stuff

The pricing works like this. For $24.99 per month, you can create a monthly subscription that can be cancelled at any time. For $149.99, you can sign up for a year, and I think there’s a two-year option.

I say I think because Morningstar’s service level when it comes to answering questions about their product is terrible. If you want to cancel your free trial, you have to phone in and actually talk to a human about it like it’s 2002 or something. There’s also very little to nothing in the member’s area that tells you how much you’re being charged. These changes would have been implemented years ago if Morningstar had more of an Amazon attitude, but hey. I suppose this kind of stuff is par for the course.

Onto the offerings

With their stupid billing methods out of the way, let’s move on to some of the things the Morningstar premium service offers.

We’ll start with one near to my very uncool heart, the stock screener. Just how premium will the stock screener be, anyway?

I decided to do a really quick screen of companies trading at low price-to-book ratios and a low price-to-cash flow ratio. The interface was a little challenging at first, but I conquered it fairly easily. A minute later, my screen was ran.

The results were lackluster. The screen searched for both values independently, rather than as a combination. It showed everything with a low P/B ratio or a low P/CF ratio. As you can see by this sample, the results weren’t very helpful. Some of these companies are very much unlike the others.

After a few minutes of playing, my conclusion is the Morningstar premium service stock screener is about as good as the free one on the TSX website. Yawn.

Let’s move onto the next thing I was excited about, analyst reports. To see just how inclusive these analyst reports were, I did searches for 10 random TSX Composite Index members. They included:

That’s a nice mix of stocks we’ve all heard of and randoms that only their mom’s think are cool. Nice try, Kinaxis. You’re clearly made up.

How did Morningstar do? CIBC had it’s own report. So did TransCanada, Crescent Point, Magna, and Great-West Life. The other five had nothing, further confirming my theory that Kinaxis less real than my eighth grade girlfriend. Her name was Mary Todd, and she touched me under the covers.

I shit you not, I 100% told at least two guys that and they believed me. It was easier to lie back then.

Anyhoo, those companies are some notable exceptions. Cominar has a market cap of nearly $3 billion. Americans might scoff at the size of it, but the company is Quebec’s largest landowner and is one of the 10 largest REITs in Canada. It’s not really big, but it’s not exactly small, either. (Ed. note: really? Two penis jokes in three paragraphs? THINK OF THE CHILDREN.)

If you exclusively invest in the top 100 biggest TSX companies, you’ll likely be pretty happy with the Morningstar premium service. I spend a lot of time looking at smaller stocks, which almost always don’t have a Morningstar analyst covering them.

And since apparently I’m more negative than an army of electrons (FINALLY, A SCIENCE JOKE ON FINANCIAL UPROAR), I’ll take this opportunity to complain about how Morningstar’s site is slower than Ben Roethisberger trying to figure out quantum physics.

What I actually liked

This has been a pretty negative review so far, so let’s skip to some of the stuff I like about the Morningstar premium service.

It has a feature where it condenses key financial figures of a company’s last decade on one easy-to-read page. This gives you an easy way to track earnings, book value, free cash flow, and so on. You should always double check the actual company filings to make sure the numbers are right, but it’s a nice place to start.

Which is great, except Morningstar offers it for free to anyone with a laptop and an internet connection. So let’s move on.

The fund information is top-notch too. It’s not quite as good as you’ll find by going to the fund’s website itself, but it’s quite detailed. There are lots of analyst reports in this section, covering all sorts of good and not-so-good mutual funds. If you’re a fund investor, these alone might be worth the price of admission. But who’s a mutual fund investor these days?

Should you buy it?

I’m currently on day 10 of a two week Morningstar premium membership free trial. By the time this gets published, I’ll no longer be a member. Even if they gave it to me for free, I doubt I’d use it much.

Most of the things I find valuable from it are available to people who sign up for free. It’s also pretty evident their focus is on U.S. investors. That might please some of you, but I prefer to do much of my own investing at home. WHOO CANADA REPRESENT.

Besides, there’s one really important reason why you shouldn’t pay. Your online broker likely has access to all of the analyst reports already. I know mine sure does.